GlobalFoundries: Not Our Pick of the Fabs, Still a Sell

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GlobalFoundries, or GF, is a leading global semiconductor manufacturer with operations in the United States, Europe, and Asia. The company specializes in the design, manufacturing, packaging, and testing of integrated circuits and custom semiconductor products. Since then, the company has rapidly expanded its capabilities and offerings, providing services for leading customers such as Intel, Apple, Qualcomm, and Samsung. GLOBALFOUNDRIES INC ($NASDAQ:GFS) utilizes advanced technology and processes to provide cutting-edge products to customers. Their offerings include a variety of advanced features and capabilities such as high-speed transistors, low-power transistors, and integrated circuits designed for high performance computing.

Additionally, the company offers custom design services to help customers create the best possible solutions for their applications. The company’s strong capabilities and offerings as well as its impressive portfolio of customers make it an attractive option for many investors.

Market Price

GlobalFoundries Inc (GF) has had a difficult week on the markets, with the stock opening at $62.6 and closing at $61.5 by Thursday’s end, representing a drop of 1.2% from its previous closing price of 62.2. This drop is indicative of the larger market sentiment towards GF, which we believe is not particularly favorable. Although GF offers a unique range of services and products, such as advanced chip design and manufacture for the semiconductor industry, we do not believe it is an ideal pick among competitors in the same sector, such as Intel or TSMC. Thus, we do not recommend GF as a buy at this point in time.

However, given the current market conditions and the potential for future growth of the semiconductor industry, we believe GF still holds some value and is worthy of consideration when making investment decisions. Consequently, we suggest investors sell their current holdings in GF instead of purchasing more shares. Live Quote…

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for Globalfoundries Inc. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for Globalfoundries Inc. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for Globalfoundries Inc. More…

Key Ratios Snapshot

Some of the financial key ratios for Globalfoundries Inc are shown below. More…

Analysis

We conducted an analysis of GLOBALFOUNDRIES INC‘s wellbeing. According to our Star Chart classification, GLOBALFOUNDRIES INC is classified as a ‘rhino’ – a type of company which has achieved moderate revenue or earnings growth. Investors who may be interested in such a company include those who want to invest in a moderate-growth company with a strong base of assets and operations. The financial health of GLOBALFOUNDRIES INC is also strong, with a health score of 8/10 with regard to its cashflows and debt. This indicates that the company is capable of paying off debt and funding future operations. In addition, GLOBALFOUNDRIES INC is strong in asset management, medium in growth, profitability and weak in dividend. More…

Peers

With the technological advances in the semiconductor industry, the competition between foundries has become increasingly fierce. GLOBALFOUNDRIES Inc, a leading foundry company, has been locked in a battle with its competitors, Advanced Micro Devices Inc, Taiwan Semiconductor Manufacturing Co Ltd, and Intel Corp. In order to maintain its competitive edge, GLOBALFOUNDRIES has made significant investments in cutting-edge manufacturing technologies and has been aggressively expanding its production capacity.

– Advanced Micro Devices Inc ($NASDAQ:AMD)

Advanced Micro Devices, Inc. (AMD) is an American multinational semiconductor company based in Santa Clara, California, that develops computer processors and related technologies for business and consumer markets. AMD’s main products include microprocessors, motherboard chipsets, embedded processors and graphics processors for servers, workstations and personal computers, and embedded systems applications.

As of 2022, AMD has a market cap of $93.57 billion and a return on equity (ROE) of 4.13%. The company’s products are used in a variety of electronic devices, including personal computers, game consoles, and servers. AMD is a leading supplier of microprocessor technology for the PC market.

– Taiwan Semiconductor Manufacturing Co Ltd ($TWSE:2330)

Taiwan Semiconductor Manufacturing Co Ltd is a semiconductor foundry. The company has a market cap of 10.29T as of 2022 and a Return on Equity of 22.34%. Taiwan Semiconductor Manufacturing Co Ltd is the world’s largest dedicated semiconductor foundry and one of the largest fabless semiconductor companies. The company offers a comprehensive set of IC design enablement tools, libraries, IPs, design services, advanced packaging, test and yield optimization solutions to help customers accelerate time-to-market.

– Intel Corp ($NASDAQ:INTC)

Intel Corp. is an American multinational corporation and technology company headquartered in Santa Clara, California, in the Silicon Valley. It is the world’s largest and highest valued semiconductor chip manufacturer based on revenue and is the inventor of the x86 series of microprocessors, the processors found in most personal computers (PCs). Intel supplies processors for computer system manufacturers such as Apple, Lenovo, HP, and Dell. Intel also manufactures motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphics chips, embedded processors and other devices related to communications and computing.

The company’s market cap is $108.48B as of 2022 and has a return on equity of 19.16%. Intel Corp is a technology company that designs and manufactures computer processors and other components. The company is headquartered in Santa Clara, California, in the Silicon Valley.

Summary

GlobalFoundries Inc. is not a preferred choice for investors, as analysis suggests that the company is not currently in a position to deliver sustainable returns. The stock has underperformed the market over the past year, and further downside is expected in the near-term as macroeconomic and industry-specific headwinds continue to weigh on performance. The company is facing a challenging environment due to increasing competition, declining demand, and increased pricing pressure.

Furthermore, the company’s relatively high debt load and lack of cash reserves could limit its ability to take advantage of potential opportunities. Investors should therefore continue to monitor the situation closely and consider the risks before making any decisions to invest.